A man named Dr. Mulligan races his car through a mountain pass while a helicopter pursues overhead. He quickly stops to let a young boy out of his car, then drives himself over a cliff. When an elderly couple finds the boy in the woods, all he remembers is that his name is Daryl. The couple takes the boy into town and turns him over to a child care center where he is given a series of health tests and diagnosed with amnesia. Howie Fox, a worker at the center, asks his friend, Andy Richardson, if he and his wife, Joyce, will foster Daryl until they locate his family. The Richardsons happily accept, as they have long been waiting to adopt a child. Daryl befriends a neighborhood boy named Turtle Fox, who questions him about his memory loss. Soon, Daryl impresses everyone with his extraordinary intelligence. When Andy teaches him how to play baseball, Daryl is a natural, and Andy plans to put him on the youth baseball team that he coaches. Later, while visiting an automatic bank teller machine, Andy has trouble removing his funds, and the boy expertly works the computer to extract his money. When Andy’s back is turned, Daryl enters codes into the machine and increases Andy’s balance to over $1 million. At his first baseball game, Daryl hits a home run and continues to outshine his classmates. Later, Joyce complains to Turtle’s mom, Elaine, that Daryl is too self-sufficient, and she wishes he needed her more. When Turtle overhears the conversation, he advises his friend to intentionally make a few mistakes so that Joyce can feel useful. Taking his advice, Daryl strikes out of the baseball game then talks back to Andy, which pleases Joyce. In time, a family comes forward and claims that Daryl is their son, presenting photographs of the boy as a toddler. Andy, Joyce, and Daryl are devastated by the news. The couple claiming to be Daryl’s parents, Jeffrey and Ellen Stewart, visit the Richardson’s home to collect Daryl, who has no memory of them. After they leave, Andy wonders at the Stewarts' unfeeling behavior. On the private plane taking them home, the Stewart’s praise Dr. Mulligan for kidnapping the boy, and agree that it did Daryl well to be a part of “normal” society. Daryl asks if they are actually his parents, and later, he is taken to laboratory and given a brain scan. Daryl’s brain is revealed to be a computer, and that the Stewarts are scientists named Dr. Jeffery Stewart and Dr. Ellen Lamb. After they repair the memory failure in his brain, Daryl’s name is displayed as an acronym for "Data Analysing Robot Youth Lifeform," or "D.A.R.Y.L." When the boy’s previous months of activity are viewed in video form on a television screen, the scientists are impressed that he surpassed his programming to make subjective and emotional decisions, and Dr. Stewart scolds Dr. Lamb for calling the boy, “it.” Later, Dr. Stewart reports to the Department of Defense, revealing that Daryl is now able to feel human emotions. General Graycliffe deems these findings counterproductive to the department, terminates the “Youth Lifeform” project, and orders Daryl to be destroyed. After, Daryl asks Dr. Stewart for a visit with Turtle and the Richardsons, then questions the doctor about his existence. The doctor grants permission, and Turtle and the Richardsons are surprised to arrive at a military base to see Daryl. There, Dr. Stewart explains that the boy is an artificial intelligence experiment, and only partially human. Daryl’s guests are not permitted to see him, but Turtle sneaks in to his room and asks if his friend knew he was a robot. Daryl says he knows now that his memory has been restored, but claims to feel the same as he did before. Dr. Stewart then brings the Richardsons inside for a tearful reunion. As they leave, the doctor plots to return Daryl to Joyce and Andy in five days time, and tells them to expose the experiment to the press if he does not arrive. Later, Dr. Lamb reports Dr. Stewart’s activities to the military, and they arrive to question him. They order the doctors to destroy the “Lifeform,” denying its humanity. Placing Daryl on an operating table, the doctors “terminate” him, and General Graycliffe checks the computer outputs from his brain to confirm the termination. As Dr. Stewart leaves the base, a final message appears on the screen from Daryl, revealing their plot. The general scolds Dr. Lamb for the deception, and she asserts the boy has become human. Outside, Dr. Stewart drives away with Daryl hidden in his car, and soon, the military gives chase. As the pursuit continues, Daryl takes the wheel and expertly maneuvers their escape. The next day, they are stopped at a roadblock, and Dr. Stewart is shot. Before he dies, the doctor apologizes to Daryl, and tells him to never doubt that he is a real person. After, Daryl sneaks onto a military base to steal a fighter plane. On the ground, officials transmit that they will destroy the jet if it leaves U.S. airspace. Daryl sends word to Turtle via walkie-talkie to meet him at a local lake, and ejects from the plane moments before it explodes. With the ejector-seat tracker disabled, the military believes Daryl has been terminated. Turtle races to the lake with his teenage sister, Sherie Lee, and spots Daryl floating in the water. As Turtle swims to rescue his friend, Sherie Lee flags down a passing car to take them to the hospital. When Andy and Joyce arrive, they learn that Daryl has died, but back at the Richardson’s home, Turtle argues that a robot cannot die if it has no brain. At the hospital, Dr. Lamb sneaks in to treat Daryl, and soon the boy runs home to join his friends and family, as they embrace in celebration.